How to Choose the Best Funeral Cover
Everyone wants to make their last farewell to a loved one as important and as meaningful as possible. However, a funeral can easily cost more than R50 000, and this amount is not a joke to many people.
To ease the burden of worrying about funeral costs, many people are signing up for a funeral cover.
What is a Funeral Cover?
A funeral cover is a type of insurance designed to cover the burial expenses and associated costs left by the policyholder to the beneficiaries. The lump-sum payment that can be claimed by beneficiaries is limited to R100 000 by law.
Funeral cover providers often allow the following people to be included in the list of beneficiaries:
- Spouse or partner
- Parents and in-laws
- Extended family members
A funeral cover is often confused with a life insurance and a burial society. Each has a varying purpose, benefit, coverage, and limit, so understanding their differences will help you choose which is the best option for your situation.
A burial society is an informal association designed to assist low-income earners in availing an alternative solution to a funeral cover. A registration fee is required to join a society and the monthly payments of the members are pooled into one big fund. The fund is then used to provide financial assistance to beneficiaries of the members in the advent of death like a funeral cover.
Life insurance, on the other hand, pays money to the beneficiaries of the deceased to help fill financial responsibilities. This alleviates the income gap left to the loved ones until they can cope with the changes in their situation.
Tips on Getting the Best Funeral Cover
Finding the appropriate funeral cover can be challenging since you need to dissect all the information the insurance providers give. Here are tips on how you can choose the best funeral cover provider in South Africa:
1) Apply as early as you can
The earlier you afford a funeral cover, the better since age plays a big factor in how much you’ll have to pay monthly on insurance. Like any other insurance, the older the client is, the higher the risk for serious illnesses, thus the increased probability of making a claim.
2) Identify the benefits package your family needs
Determine whether you need a lump-sum payment or cash plan with additional benefits.
- Cash only
The beneficiary receives a lump-sum payment from the insurance provider in this type of funeral cover. With this, the beneficiary has full control over how to use the money. They can arrange the suppliers for the memorial and decide how much to allocate for the burial services. Then, they can keep whatever’s left of the payment.
- Cash with benefits
The beneficiary will receive a reduced lump-sum payment plus other benefits that can help them manage the funeral service. Benefits may include cashback, education, grocery, and double accidental cover that are designed to safeguard your finances in case you need the money for more pressing matters.
3) Shop around for the best rates
Always shop around for the best rates before you decide on a funeral cover provider.
Funeral cover policies are subject to monthly and annual price increases. You can review your existing policy to reduce annual premiums. Changes in the law, company and economic conditions can impact the price of premiums and the benefits. As a policyholder, you’ll be notified of any changes in your policy.
4) Estimate your funeral costs
Calculate how much the family will spend to cover your funeral cost so you’ll have assumptions on the policy you need. Although the burial expense is the largest single cost you need to worry about, there are also other possible incidentals to consider including medical bills, credit card balances, legal fees, and changes in the cost of living.
Look at your household income and expenses to assess how much you can pay toward a funeral cover. The amount should be comfortable enough that you won’t be cutting other necessary expenses just to pay the insurance.
Talk with your family and come up with a decision whether you want a traditional or a religious funeral. Either of these will cost more than the usual send-off ceremony, so discuss also the associated expenses with each option.
Identify the kind of funeral cover you want to get to estimate how much you must allocate for it every month. Always consider your and your family’s lifestyle in choosing a funeral plan.
5) See beyond the expenses after your burial
Look beyond paying for the funeral and think about how you can still support your family even after you’re gone. A funeral cover will only answer immediate burial expenses, but it won’t provide supplemental income your family may need the most. In this case, consider getting a life insurance too in addition to your funeral cover to further secure the future of your loved ones.
Your bank and savings account will be held under the probate process, meaning it won’t be immediately available to family members to cover the funeral costs. This can be burdensome, especially in cases where family members must to borrow for the funeral expenses.
6) Always keep records up to date
Keep the information on your funeral policy up to date. Always update the beneficiaries, contact details, and persons covered to avoid problems when your family makes the claim. There have been issues with family members having a hard time claiming the benefits because of inaccuracies in the info given to policy providers.
7) Tell the provider about your money problems
If you’re having trouble with making monthly payments, contact your insurance provider immediately and tell them about your situation. Usually, arrangements can be made to adjust your payment scheme and keep your account active.
Some funeral policies offer extra services like free transportation from the place of death to the burial location. Some even have unemployment or maternity benefits that allows you to take a pause on the monthly payments for a certain time until you find a new job, or you have more leeway on expenses after giving birth. These schemes can help adjust alleviate expenses without closing your account.
8) Make sure your payments are going through
Many funeral cover providers enable applications online or over the phone. When you prefer either of these options, make sure you understand everything about the policy before you give approval. Ask about debit order on whether it will be arranged by them or if you must do it yourself.
Check with your bank to make sure that the debit order has been set up properly. Many policyholders had the issue of being penalized because they thought their payment has started when in fact, the order has been held up on the bank’s side.
9) Hide nothing about your health status
When applying, always tell the truth to the agent you’re talking to. Tell them about any pre-existing medical conditions, work hazards, age, and other personal info the funeral cover provider needs to determine the extent of security they can offer. It’s recommended to undergo a physical examination first to ascertain your current health condition. Some insurance providers give this kind of service for free to applicants.
10) Be wary of restriction periods
A restriction period refers to the time when a claim can’t be made. This can last for 3 months to 3 years, depending on the contract given.
You won’t be covered should anything happen to you during the said period even if you’ve been paying premium regularly. Some policies have exceptions though and may allow coverage on accidental deaths.
The silver lining with this restriction is that you’ll most likely be paying a lower premium during the said period.
11) Determine the policy’s duration
How long will the policy be in effect? Will it still be in effect even if you live up to a hundred years old? For how long will you be paying monthly premiums?
Answers to these questions should be included in the list of primary factors in choosing a funeral cover. Of course, you also must estimate whether you can still pay the premium throughout the years the policy is in effect.
12) Ask if your family can choose the funeral home
Having the freedom to choose the funeral service applicable to the situation will be to your advantage. Your family may want either a traditional or a religious funeral, so having a flexible service provider is better for this situation.
Ask for the recommended funeral homes of your service provider since they’ll most likely have better rates compared to others.
Reminders Before Making a Claim
Before claiming the funeral cover, the death should be reported first to a Home Affairs office. The department will then issue a Death Report and they’ll wait for relevant documents to be sent to them. After this, they’ll issue a Death Certificate which will be shown to the insurer for the release of funeral cover benefits.
Aside from filling out the Claims Form and the Beneficiary Form, the beneficiary will have to supply the following supporting documents upon making a claim:
- Certified copy of the Death Certificate
- Copies of ID of the deceased
- Copies of ID of the beneficiary
- Banking details of the beneficiary
Most funeral cover providers will payout within 48 hours so long as they receive the complete and cored documentation required.
Incorrect information can cause disqualifications in making a claim. Failing to pay premiums for a certain time may also cause the policy to lapse, thus making any payout impossible.